India is one of the technologically most adaptive countries, and cryptocurrencies are revolutionizing how business is conducted locally. Despite the confusion brought by the 2018 Reserve Bank of India ban on banks from participating in their transactions, cryptocurrency use is steadily rising on the subcontinent.
Digital currencies hold numerous benefits over fiat money, presenting a more convenient way to conduct business, especially in a huge economy like India’s. Not only is it more secure, but it also has a more stable and consistent value across borders.
Here are the top five ways to manage cryptocurrencies in India.
Table of Contents
Understanding the Trade
To begin your journey with digital currency, you need to understand the basics of managing them. First, you need to choose a trusted blockchain wallet to store your cryptocurrencies. These wallets enable you to send, receive, and store cryptocurrencies. They are as easy to operate as any other digital wallet such as Skrill and Paypal.
However, you need to choose the most secure platform. Cryptocurrencies are considered more secure, although wallets can be hacked. Their anonymity makes it almost impossible to trace them.
Like traditional currencies, different cryptocurrencies also have varying values. You need to understand the different values to transact profitably as they continuously update.
Choosing Your Currencies
Cryptocurrencies’ values are consistent across borders. But different currencies have received varying reception depending on their features and the features they offer. Bitcoin, for example, is considered digital gold. Its name is often used synonymously with cryptocurrencies. Bitcoin was the first cryptocurrency and still is the most used.
Etherium, on the other hand, is gaining growing popularity at its second position in the cryptocurrencies market. It has the highest number of circulating coins at about 901,387. Besides payments, Etherium’s blockchain technology is used to secure digital assets.
Cardano is another popular cryptocurrency founded by Charles Hoskinson, an Ethereum co-founder. Cardano is easier to mine and uses far less energy than Bitcoin and Ethereum. The developers are also working on a smart contract feature like that of Ethereum. Lastly, Dogecoin might be less popular but has a faster mining rate than its superiors.
Deciding Where to Use Cryptocurrencies
Cryptocurrencies present new benefits which have caught more strategic attention in some markets. In some countries, cryptocurrencies are more suitable for international transactions, especially if the local currencies are unstable. For example, some Brazilians prefer cryptocurrencies to prevent loss of money in bank accounts in case of another financial crisis.
However, fast-growing industries like the gambling market benefit most from digital currencies. Online gamers can enjoy assured safety as long as they wager on trusted online platforms. Besides security from theft, cryptocurrencies also keep them anonymous, especially when gambling unregulated markets. Unlike banks and traditional systems, cryptocurrencies do not need critical personal details during transactions.
Besides, they also present a faster way to deposit and withdraw funds, unlike traditional systems that can take days to process.
Handling Taxation
It’s unclear whether cryptocurrencies are to be classified under currencies or commodities due to their diverse nature. Unlike traditional money, cryptocurrencies are decentralized and free from government control. But taxation applies to all transactions conducted.
According to Indian laws, all incomes are subject to taxation, and so are incomes generated from cryptocurrencies. The Income Tax Act requires that capital gains tax be paid for profits generated from cryptocurrencies investments.
Depending on the frequency at which you trade the cryptocurrencies, your investment can be taxed as business income or capital gains. Your taxation rate also depends on whether you use your investment within or beyond a 3-year period.
However, their anonymity has made their direct taxation almost impossible.
Staying Updated
Unlike the more stable traditional currency’s value, the value of cryptocurrencies changes in the blink of an eye. New technologies and uses of digital currencies are also in continuous trial and execution. Every change in the markets deprives some opportunities while presenting new ones. The changes also present profit-making opportunities.
To remain competitive in the digital currencies market, you have no choice but to stay updated with recent trends. For example, the invention of Ethereum’s smart contracts presents a new and more secure way of managing digital assets. Older and more prominent coins are also facing competition from emerging coins, causing some to die out.
Various blogs, vlogs, and online blockchains academies provide training and updates about cryptocurrencies. You can also get updates from various news outlets such as newspapers and television.
With the growing need for a decentralized financial medium, cryptocurrencies are only likely to spread further. However, governments and other powerful financial bodies will not give it a rest until they gain control over the currently free crypto market. Nonetheless, cryptocurrencies will continue to provide a more cost-effective, secure, faster, and standard way of making payments.
